Archive for March, 2009

Public sector IT cost savings

March 30th, 2009

With the huge buying power wielded across the public sector, you would imagine that they always obtain the best technology, best deals and the highest discounts. So why is it that time after time, all we read about in the press is how wasteful IT spending is in the public sector? One issue is that the public sector seems to be very conservative when it comes to buying technology. As a result it often buys technology that is already going out of fashion in the private sector, or it seems to wait an age to adopt new technological advances (such as open source software) which can drive down costs and improve productivity. For example, it would be an interesting exercise to see how many million of pounds the public sector could save if it was simply to move from Microsoft Office to OpenOffice? Being risk averse can be a costly road to follow if you get stuck with out-dated legacy solutions with expensive pricing mechanisms and un-breakable multi-year commitments.

When is an IT cost reduction not an IT cost reduction?

March 23rd, 2009

I had to laugh the other day. IT cost reduction comes in many forms; one of which popped up when we were questioning a well known software supplier about a proposal they had produced for a client of mine. To the comment ‘your proposal doesn’t explain whether these are list or discounted prices’, the supplier replied by saying ‘they’re neither list nor discounted prices’. Once we had stopped laughing the supplier clarified by saying that the proposal included ‘special prices that bear no relation to their own price book or to their current list prices’. They had simply bundled the software licence costs with the implementation services and the on-going maintenance costs, and had then taken off an arbitrary discount off the whole lot. We then insisted that they break down the bundled costs and show itemised list prices, discounts and net prices for every product and service. Unsurprisingly, this revealed that they had varied discounting with some items discounted aggressively and some items remaining at or near list price (the latter of which no doubt gave more commission to the salesperson at that particular moment in time). Suffice to say, itemising allows everyone to see how a deal has been shaped and enables good negotiatiors to attack both the detail as well as the total cost number.

Price benchmarking IT costs

March 18th, 2009

When new money is short in supply, and your Finance Director is pressing for measurable IT cost savings, what can you do to validate your existing spend or uncover hidden over-spend? That’s pretty much the question Silver Bullet Associates was asked today by an IT Director. It’s a good question so let me summarise what I said to him; price benchmarking is a great way to quickly ascertain if you’re getting value for money from your IT suppliers.  It’ll also highlight areas where you are paying too much (compared to other users of the same products or services). But selecting a benchmarker can be tricky as not all ‘benchmarkers’ are independent. Many ‘benchmarkers’ have some form of relationship with the very suppliers you want assessed. Just look at the main IT Research and IT Consulting companies; they advise both users and suppliers, which can cause conflicts of interest when it comes to offering best advice. So select your benchmarker carefully and look for true independence.

IT Cost Savings

March 12th, 2009

IT cost savings have become something of a Holy Grail in recent times as businesses and organisations of all shapes and sizes scramble to find ways to cut un-necessary costs. On the way to a Silver Bullet Associates client meeting the other day, I had a timely musical reminder of what IT management across the UK is facing when Simply Red’s ‘Money’s too tight to mention’ came on the radio. How many IT Directors have been told by their Finance Directors that costs must be reduced where ever possible? That kind of mandate will inevitably mean the IT Directors will take a careful look at all areas of spend, including revisiting the pros/cons of open-source products, virtualisation, outsourcing and offshoring. But before investigating such cost saving avenues, we would recommend that IT Directors look for some simpler savings opportunities such as re-negotiating existing vendor contracts and squeezing more value from your incumbent suppliers.

Join the Negotiation Power online community

March 5th, 2009

In response to a growing number of requests, Silver Bullet Associates is delighted to announce the launch of our sister website www.negotiationpower.co.uk. This provides an online forum where anyone who buys IT or is responsible for IT Procurement can share their experiences, network with their peers, and learn from other IT Buyers who have ‘been there, done that’.

By joining the Negotiation Power online community, you can:

  • Save money – get advice on how to negotiate better deals with your IT suppliers
  • Make useful contacts - network with other IT Managers and IT Procurement professionals
  • Share best practices – in Product selection, Procurement and Supplier negotiations
  • Obtain valuable market intelligence – on IT suppliers and their products

We’re offering everybody a 30 day free trial. So go on, check out the website, sign up and get involved!

How to finance IT deals with Vendor’s own money

March 2nd, 2009

One of Silver Bullet Associates’ clients was asking me the other day whether I knew of any readily available sources of finance that could help them fund some business critical IT projects. When I suggested he ask his IT vendors to help fund things, he looked at me as if I had grown a second head. So I explained to him that the big IT companies have always hoarded cash on a huge scale. Today, Cisco is sitting on $26bn in cash and short term investments while Microsoft has over $20bn and Oracle has over $10bn in their respective current accounts. In an era when capital markets have dried up and banks are loathe to lend, businesses are finding it hard to fund initiatives. IT vendors are acutely aware of this, and some of them are starting to bankroll their customers purchases. They may not be drawing on their cash mountains directly, but they are using their AAA credit status to enable customers to defer payments or spread payments over 2 or 3 years at minium or zero cost. In the past few months, we’ve seen Microsoft, HP, SAP and others offer 0% financing to some clients to help them fund new purchases. If you have some IT projects currently on ice which you might be able to defrost with some creative vendor financing, then it’s worth you asking your IT vendors what they can do for you!